Technical Analysis


Gurumurthy K | Updated on January 18, 2018 Published on July 30, 2016

SBI is range-bound with a bullish bias (₹229.05)

SBI was range-bound between ₹222 and ₹235 for the third consecutive week. A breakout on either side of this range will decide the next move . The 21-day moving average at ₹226 is a key near-term support. A strong break and a close below this level will increase the possibility of the stock breaking the range below ₹222. However, a strong trendline support at around ₹220 and ₹219 can limit the downside even if the stock declines below ₹222 . Having said this, the broader bias remains positive to see an eventual break above ₹235 in the coming days. Such a break can take the stock higher to ₹242 and ₹245 initially. Further break above ₹245 can take SBI higher to the next targets of ₹250 and ₹255 in the short term and even ₹265 over the medium term. Short-term traders holding long positions can retain the stop-loss at ₹218 for the target of ₹250. Medium-term investors can accumulate longs on dips near ₹222 and ₹220 while retaining the stop-loss at ₹199 for the target of ₹255.

ITC is gaining momentum (₹252.45)

ITC, though it continues to trade range-bound, is trying to gain momentum. With strong supports around ₹245 and ₹240, the short-term view remains positive. The 21-day moving average at ₹249 is a key intermediate support which has been limiting the downside over the last three weeks. A break below this support can take the stock lower to ₹245 or ₹240 in the short term. However, a fall below ₹240 looks less probable at the moment. Also, the downside in the stock could be limited to ₹235 or ₹230 even if it declines below ₹240 in the coming days. Immediate resistance is at ₹255. A strong break and a daily close above this hurdle will be the first sign of a fresh rally. A strong break above ₹260 will confirm the same and take the stock higher to ₹268 and ₹270. Further break above ₹270 will see ITC moving up to ₹290 thereafter. Medium-term investors can hold the long positions and accumulate near ₹241 if the stock falls below ₹246. Retain the stop-loss at ₹228 for the target of ₹270.

Infosys is under pressure (₹1,073.95)

Infosys continued to trade between ₹1,050 and ₹1,100 for the second consecutive week. The sharp pullback from the intraweek high of ₹1,097.1 shows the lack of strength in the stock to break above ₹1,100. This keeps the broader bearish view intact; it also keeps alive the danger of the stock falling below ₹1,050. Such a fall will confirm the reversal of the long-term uptrend that has been in place since 2013. In such a scenario, Infosys can fall to ₹1,000 . A strong break below ₹1,000 can drag it further lower to ₹950 or even ₹915 — the 200-week moving average support. The downside pressure in the stock will ease only if it breaks above the resistance at ₹1,100 decisively. Such a break can take it higher to ₹1,150 or ₹1,175 thereafter. However, the downside threat will be completely wiped out and the outlook will turn positive only if Infosys rallies beyond ₹1,200. Such a strong rally looks unlikely in the near term. On the charts, the bias remains negative; the stock can fall to ₹1,000 and even lower levels in the coming weeks.

Support at ₹1,000 can limit downside in (₹1,015.5)

RIL continues to trade above the psychological ₹1,000 level, but is not gaining fresh momentum to extend its up-move. The stock was range-bound between ₹1,008 and ₹1,034 in the past week. However, the overall view will remain positive as long as it trades above ₹1,000. Cluster of supports are placed around ₹1,000 level which reduces the possibility of the stock breaking below this psychological support level. Immediate resistance is at ₹1,030. Inability to break above this resistance can take the stock lower to ₹1,000 in the near term. Such dips will be a good buying opportunity. The stock will gain fresh momentum on a strong break above the resistance at ₹1,030. The next immediate targets will be ₹1,045 and ₹1,050. Further break above ₹1,050 will open doors for a fresh rally to ₹1,070 or even ₹1,100. Short-term investors can make use of dips to buy near ₹1,000. Stop-loss can be placed at ₹975 for the target of ₹1,060. Revise the stop-loss higher to ₹1,015 as soon as the stock moves up to ₹1,045.

Bullish outlook is intact for Tata Steel (₹354.75)

Tata Steel fell for the second consecutive week. It fell 2.9 per cent last week and is down 4.8 per cent over the last two weeks. However, the 1 per cent bounce on Friday keeps the broader sentiment positive . Technically, the 21-day moving average support around ₹350 aided to halt the fall last week. The 38.2 per cent Fibonacci retracement support is also poised around ₹348. These supports can limit the downside . If the stock manages to move higher in the coming days, a rise to ₹370 and ₹375 is possible . The inability to break above ₹375 can keep the stock inside the ₹350-₹375 range for some time. But a strong break above ₹375 will see a rise to ₹387 . It will also increase the possibility of the stock rallying to ₹400 and ₹430 thereafter. Medium-term investors can hold the longs. Retain the stop-loss at the revised level of ₹310. The short-term outlook will turn negative only if the stock declines below ₹348 decisively. The next targets will be ₹340 and ₹337.

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